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Morgan Stanley, Other Underwriters Make $100 Million Profit on Facebook IPO

May 23, 2012 11:43 am ET

By Gina Chon, Aaron Lucchetti and Ryan Dezember

Associated Press

Morgan Stanley and other underwriters have made a profit of about $100 million stabilizing Facebook Inc. stock since trading began on Friday, people familiar with the matter said.

As the lead underwriter responsible for Facebook’s IPO, Morgan Stanley would receive the largest chunk of those profits, the people said. The bank would receive the money on top of millions of dollars in IPO fees, the people added.

These gains are expected to be offset somewhat by losses associated with reimbursing clients who lost money because of technology snafus at the Nasdaq Stock Market in Facebook’s first day of trading, one of these people added.

It’s not unusual for underwriters to see gains from stabilizing new stock offerings.

Morgan Stanley was the stabilization agent for Facebook’s IPO, meaning the bank was in charge of an overallotment of about 63 million shares that can be used to help support Facebook’s share price.